Best Practices for Renewals

Retention of existing accounts is a key factor in an agency’s profitability. Good customer service means contacting clients on a regular basis, but no less than annually, to determine if their needs have changed. This is a good time to revisit some coverages that may have been rejected in the past and to offer them once again. In addition, new policies may be available in the market that were not offered in the past, such as those involving e-commerce and the Internet. A review of coverages not currently being provided is vital for rounding out accounts and reducing E&O exposures.

Renewals with standard carriers don’t present the same problems as those with nonstandard carriers. In general, the carrier is responsible for renewing a policy unless proper notice of nonrenewal has been issued (see E&O TIP #1). In Texas, "renewal" with admitted companies means providing like and similar coverage to the expiring policy. An insurer may not restrict coverage on a renewal policy unless it has complied with the nonrenewal provisions.

Effective for policies delivered, issued for delivery, or renewed  on or after January 1, 2018.
A notice of non-renewal is not required for personal auto, residential property including farm or ranch owners, or property and casualty coverage for governmental agencies if the insurance company notifies the insured at least 30 days in advance of a material change in the coverage at renewal. Material change is defined as:

  1. A reduction of coverage
  2. A chance in conditions of coverage
  3. A change in the duties of the policyholder. 

Since much of the responsibility rests with the insurance company, and because so many renewals are processed automatically, it is easy to become complacent in the renewal process. There really is no such things as “renew as is”, since it’s quite unlikely that absolutely nothing has changed for the policyholder in the course of a year. Direct bill renewals should not be treated any differently than agency bill policies.

With nonstandard carriers, there must often be a new application and a deposit premium to continue coverage. Nonadmitted companies are not bound by Texas nonrenewal laws and are not required to notify anyone - surplus lines agent, retail agent or policyholder - about changes in their policy forms on renewal. These transactions require a high degree of care to see that there are no coverage gaps or new coverage restrictions on the renewal policy.

As the insurance market place changes, agents will be forced to move clients to new carriers. This creates additional exposures, since no two companies issue identical contracts. Each change must be thoroughly reviewed to ensure that the new policy contains at least all the terms and provisions as the expiring one. Any deficiencies must be immediately pointed out to the insured.

There may be times when coverage cannot be renewed at all, or not on the same terms and conditions as expiring. This situation requires immediate notice to the insured and documentation in the agency’s file.

In This Section:

Best Practices Ideas for Renewals
Case Studies
Self-Audit
Sample Letters / Documents / Wording
Sample Procedures

 

The Best Practices for Avoiding E&O Claims When Handling Renewals

  • Contact EVERY customer, by phone, mail, or e-mail, 90 days in advance of renewal to obtain updated information and advise of the renewal process (see Sample Letter [#1])
  • Inform the insured of any requirements for renewal
  • Promptly notify any customer whose policy is being non-renewed
  • If coverage cannot be replaced, advise the insured in writing and ask that they sign and acknowledge
  • If coverage is placed with a new insurer, be sure all coverages, limits, deductibles, and policy terms are at least as good, if not better
  • Advise the insured immediately if any restrictions or limitations will be contained in the renewal policy that were not in a prior policy (see Case Study #2)
  • If pricing is going up, advise the client so they can be prepared when the bill arrives
  • Conduct an account review similar to the one when you first wrote the account—remember to cross-sell needed coverages (see Case Study #3) (see Case Study #4)
  • Remember to renew any previous coverage recommendations that were made to the insured and ask them to sign and acknowledge their ongoing rejection of coverage (see E&O TIP #2) (see Case Study #1)
  • Maintain a central expiration or renewal list and make sure all renewals have been ordered prior to their expiration date
  • Send a renewal binder with transmittal letter, if issuance of the renewal policy is delayed (see Sample Letter [#2])
  • Send renewal policy with transmittal letter, instructing the insured to review their policy for accuracy (see Sample Letter [#3])
  • Prepare a written procedure for handling agency bill and direct bill renewals (See Sample Procedures)